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EX-99.3 - FORM OF SUPPORT AGREEMENT - OLD LINE BANCSHARES INC | olbk_ex993.htm |
EX-99.2 - INVESTOR PRESENTATION - OLD LINE BANCSHARES INC | olbk_ex992.htm |
EX-99.1 - PRESS RELEASE - OLD LINE BANCSHARES INC | olbk_ex991.htm |
EX-2.1 - AGREEMENT AND PLAN OF MERGER - OLD LINE BANCSHARES INC | olbk_ex2-1.htm |
UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
8-K/A
(Amendment No.
1)
CURRENT
REPORT
Pursuant to Section
13 or 15(d) of
The Securities
Exchange Act of 1934
Date of Report
(Date of earliest event reported): September 27, 2017
Old Line Bancshares,
Inc.
(Exact name of
registrant as specified in its charter)
Maryland
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000-50345
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20-0154352
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(State or other
jurisdiction)
of incorporation |
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(Commission File
Number)
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(I.R.S. Employer
Identification No.)
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1525 Pointer Ridge
Place
Bowie,
Maryland
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20716
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(Address of
principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: 301-430-2500
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N/A
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(Former name or
former address, if changed since last report.)
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Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☑
Written communication pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CRF
240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4 (c) under the Exchange
Act (17 CFR 240.13e- 4(c))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth
company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.☐
EXPLANATORY
NOTE
This Amendment No.
1 on Form 8-K/A (this “Amendment”) amends and restates
in its entirety the Current Report on Form 8-K filed by Old Line
Bancshares, Inc. (the “Registrant”) on September 27,
2017 (the “Original Report”) in which the Registrant
reported its entry into an Agreement and Plan of Merger (the
“Merger Agreement”) with Bay Bancorp, Inc. This
Amendment is being filed to file a copy of the Merger Agreement and
the related form of Support Agreement entered into between the
Registrant and certain members of the board of directors and the
largest stockholder of Bay Bancorp, Inc., and to check the box on
the cover page of the Report to indicate that the information filed
herein shall be deemed filed under Rule 425 of the Securities Act
of 1933. This Amendment sets forth the complete text of the
Original Report as amended hereby, which supersedes and replaces
the text of the Original Report in its
entirety.
Section 1 - Registrant’s Business and Operations
Item 1.01
Entry
into a Material Definitive Agreement.
On
September 27, 2017, Old Line Bancshares, Inc., a Maryland
corporation (“Old Line”), entered into an Agreement and
Plan of Merger (the “Merger Agreement”) with Bay
Bancorp, Inc., a Maryland corporation (“Bay”). The
Merger Agreement provides that, upon the terms and subject to the
conditions set forth therein, Bay will merge with and into Old
Line, with Old Line continuing as the surviving entity (the
“Merger”). Immediately following the consummation of
the Merger, Bay Bank, FSB, a federal savings bank and wholly-owned
subsidiary of Bay (“Bay Bank”), will merge with and
into Old Line Bank, a trust company with commercial banking powers
chartered under the laws of the State of Maryland and wholly-owned
subsidiary of Old Line, with Old Line Bank continuing as the
surviving bank. The Merger Agreement was approved by the board of
directors of each of Old Line and Bay.
Subject
to the terms and conditions of the Merger Agreement, at the
effective time of the Merger, each outstanding share of Bay common
stock will be converted into the right to receive shares of Old
Line common stock. The number of shares of Old Line common stock
for which shares of Bay common stock will be exchanged in the
Merger, which we refer to as the “Per Share
Consideration,” will vary depending on the volume weighted
average closing prices of Old Line common stock for the 20 trading
days prior to the five trading days prior to the closing date of
the Merger, which we refer to as the “Average Price.”
Such calculation will be made as follows:
1)
If the Average
Price is between $25.66 and $29.15, then the Per Share
Consideration will be equal the number of shares of Old Line common
stock determined by dividing $11.80 by the Average
Price;
2)
If the Average
Price is $29.16 or above, then the Per Share Consideration will
equal 0.4047 shares of Old Line common stock; and
3)
If the Average
Price is $25.65 or below, then the Per Share Consideration will
equal 0.4600 shares of Old Line common stock (such number, in any
of (1), (2) or (3), is also referred to as the “Exchange
Ratio”).
The
Exchange Ratio is subject to customary anti-dilution adjustments in
the event of stock splits, stock dividends, recapitalizations and
similar transactions involving Old Line common stock. In addition,
the Exchange Ratio is subject to increase in the event of favorable
resolution of certain pending litigation and outstanding loans. The
Exchange Ratio will be increased to give effect to (1) the
after-tax income that Bay and/or Bay Bank recognize from the
settlement of the lawsuit captioned Lois F. Lapidus, et al. v. Bay Bank,
FSB, No. RDB 16-03260 (the “Lawsuit”), and (2)
subject to the limitation described below, any after-tax income
that Bay and/or Bay Bank recognize from the resolution of certain
loans (the “Net Loan Recovery Amount”). In the case of
the Lawsuit, the amount of the increase will be determined by (a)
dividing such after-tax income by the number of shares of Bay
common stock outstanding immediately prior to the effective date of
the Merger (the “Effective Date”), and (b) dividing
that amount by the Average Price. In the case of loan resolutions,
any increase will be calculated by (x) dividing the Net Loan
Recovery Amount by the number of shares of Bay common stock
outstanding immediately prior to the Effective Date, and (y)
dividing that amount by the Average Price; provided, however, that
if Bay’s consolidated net loan and lease charge-offs between
August 4, 2017 and the Effective Date exceeds $226,000, then the
Net Loan Recovery Amount will be reduced by such excess, subject to
a cap of $500,000.
We
understand that on September 26, 2017, Bay Bank received insurance
proceeds in the amount of $1,442,609 in connection with Bay
Bank’s settlement of the Lawsuit. Bay Bank expects to
recognize $984,750 in after-tax income related to such settlement
prior to the Effective Date, and as a result, we expect the
Exchange Ratio to increase as a result.
Options
to purchase Bay common stock that are outstanding at the Effective
Date will be converted into the right to receive cash in the amount
determined by multiplying (1) the number of shares of Bay common
stock issuable upon the exercise of such option by (2) the
difference between (A) the Average Price multiplied by the Per
Share Consideration and (B) the exercise price per share of Bay
common stock issuable upon the exercise of such
option.
Old
Line has agreed to elect three current members of Bay’s board
of directors to serve on the Old Line and Old Line Bank boards of
directors after the Merger, including Joseph J. Thomas, Bay’s
President and Chief Executive Officer, Eric D. Hovde, who serves as
Chairman of the boards of directors of both Bay and Bay Bank, and a
third director to be determined by the mutual agreement of Old Line
and Bay at a later date.
The
Merger Agreement contains customary representations and warranties
from both Old Line and Bay that are qualified by the confidential
disclosures provided to the other party in connection with the
Merger Agreement.
Bay has
agreed to various customary covenants and agreements, including
(1) to conduct its business in the ordinary course in all
material respects during the interim period between the execution
of the Merger Agreement and the consummation of the Merger,
(2) not to engage in certain kinds of transactions or take
certain actions during this period (without the prior written
consent of Old Line) and (3) to convene and hold a meeting of
its stockholders to consider and vote upon the Merger. In addition,
subject to certain limited exceptions, Bay is subject to
restrictions on its ability to solicit or facilitate alternative
acquisition proposals from third parties.
Old
Line has agreed to various customary covenants and agreements,
including, among others, (1) not to take certain actions during the
interim period between the execution of the Merger Agreement and
the consummation of the Merger that could frustrate the closing of
the Merger (without the prior written consent of Bay), and (2) to
convene and hold a meeting of its stockholders to consider and vote
upon the Merger.
Completion of the
Merger is subject to various conditions, including, among others,
(1) approval of the Merger by Bay’s and Old Line’s
stockholders, (2) effectiveness of the registration statement
on Form S-4 to be filed by Old Line with the U.S. Securities and
Exchange Commission (the “SEC”) to register the offer
and sale of the shares of Old Line common stock to be issued in the
Merger, (3) the filing of any required forms with The NASDAQ Stock
Market, LLC in connection with the issuance of the shares of Old
Line common stock to be issued in the Merger and the completion of
any review of such forms, and (4) receipt of required
regulatory approvals without the imposition of any condition or
requirement that would, in the good faith reasonable judgment of
the board of directors of either Bay or Old Line, constitute a
Burdensome Condition (as such term is defined in the Merger
Agreement) or so otherwise materially and adversely impact the
economic or business benefits to Bay or Old Line, as applicable, of
the transactions contemplated by the Merger Agreement as to render
consummation of the Merger inadvisable. Each party’s
obligation to consummate the Merger is also subject to certain
additional customary conditions, including (1) subject to
certain exceptions, the accuracy of the representations and
warranties of the other party, (2) performance in all material
respects by the other party of its obligations, (3) no more
than 10% of the outstanding shares of Bay’s common stock
shall have been qualified by their owners for appraisal rights
under Maryland law with respect to the Merger (with respect to Old
Line’s obligation only), (4) there shall not have
occurred, since the date of the Merger Agreement, a Material
Adverse Effect (as such term is defined in the Merger Agreement)
with respect to Old Line or Old Line Bank, on the one hand, or Bay
or Bay Bank, on the other hand, and (5) the receipt by such
party of an opinion from its counsel to the effect that the Merger
will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as
amended.
The
Merger Agreement, in addition to providing that the parties can
mutually agree to terminate the Merger Agreement, contains certain
termination rights for Old Line and Bay, as the case may be,
including upon: (1) final, non-appealable denial of required
regulatory approvals or consents; (2) the failure of the
Merger to be completed by April 30, 2018, or June 30, 2018 if such
failure is because of a failure to obtain any required regulatory
approval or consent (unless caused by a material breach of the
Merger Agreement by the party seeking to terminate); (3) a
breach by the other party that is not or cannot be cured within 30
days’ notice of such breach if such breach would result in a
failure of the conditions to closing set forth in the Merger
Agreement (provided that if the breach can be cured within
60 days’ notice, the cure period will be 60
days);(4) failure of Bay’s stockholders or Old
Line’s stockholders to approve the Merger; (5) if the
Bay board of directors withdraws, changes or modifies its
recommendation to its stockholders in any manner adverse to Old
Line regarding the Merger Agreement or the Merger or approves or
announces an intention to enter into an alternative transaction;
(6) if the Old Line board of directors withdraws, changes or
modifies its recommendation to its stockholders in any manner
adverse to Bay regarding the Merger Agreement or the Merger; (7)
the Bay board of directors has made a determination to accept a
Superior Proposal or has entered into an agreement with respect to
a Superior Proposal; (8) (a) Old Line or Old Line Bank
enter into an agreement with a view to being acquired by, or
effecting a business combination, as a result of which Old Line is
not the surviving entity or Old Line’s directors, as of the
date of the Merger Agreement, do not comprise the majority of the
surviving entity’s board of directors, with any entity other
than Bay or Bay Bank and (b) the Bay board of directors
determines that, after considering the advice of counsel and its
financial advisers, such transaction is not in the best interests
of Bay’s stockholders (provided that Bay must exercise this
termination option within 30 calendar days after Old Line is
required to file a Current Report on Form 8-K regarding events
triggering this termination option); (9) if any required regulatory
approval or consent is granted but contains or would result in the
imposition of a Burdensome Condition and there is no meaningful
possibility that such consent or approval could be revised prior to
June 30, 2018 so as not to contain or result in a Burdensome
Condition; or (10) the enactment of any law or the imposition of
any decree, injunction, judgment, order, ruling or writ that
prohibits consummation of the Merger. A “Superior
Proposal” is a third party unsolicited bona fide written proposal to enter
into an agreement with Bay on terms that the Bay board of directors
determines in its good faith judgment, after consultation with and
having considered the advice of its outside legal counsel and
financial advisers: (1) would, if consummated, result in the
acquisition of all, but not less than all, of the issued and
outstanding shares of Bay common stock or all, or substantially
all, of the assets of Bay and Bay Bank on a consolidated basis;
(2) would result in a transaction that involves consideration
to Bay’s stockholders that is more favorable than the
consideration to be paid to Bay’s stockholders pursuant to
the Merger Agreement (taking into account all legal, financial,
regulatory and other aspects of such proposal and the entity making
such proposal); (3) is not conditioned on obtaining financing
(and with respect to which Bay has reasonably assured itself of
such entity’s ability to fully finance its proposal);and
(4) is reasonably likely to be completed on the terms
proposed, in each case taking into account all legal, financial,
regulatory and other aspects of such proposal.
In
addition, if at any time during the five trading days before the
Effective Date, the volume-weighted average closing price of Old
Line common stock during the 20 prior trading days is less than 90%
of $27.00, and the decrease in such price is more than 15% lower
than the change in the average of NASDAQ Bank Index prices for the
20 consecutive trading days ending on the trading day prior to the
determination date (the “Final Index Price”) relative
to the NASDAQ Bank Index closing price as of the date the Merger
Agreement was executed, then Bay may terminate the Merger
Agreement, however, Old Line would then have the option to increase
the Exchange Ratio so that the Per Share Consideration is an amount
that equals the lesser of (a) the product of the Old Line Starting
Price, 90% and the Exchange Ratio (which at that point would be
0.4600) or (b) (i) the Final Index Price divided by the NASDAQ bank
index closing price as of the date the Merger Agreement was
executed, multiplied by (ii) 85% and by the Old Line 20 day
volume-weighted average price, divided by (iii) the quotient of the
Old Line 20 day volume-weighted average price divided by the Old
Line Starting Price (the “OLBK Ratio”), in which case
no termination will take place.
Upon
termination of the Merger Agreement by Old Line pursuant to
any of clauses (1), (2), (3) or (5) above, or by Old Line or
Bay pursuant to clause (7) above, assuming in the case of (1)
and (2) that such failure is due to the knowing, willful and
intentional actions or inactions of Bay or Bay Bank and provided
that in the case of (1), (2) and (5) that Old Line is not then in
material breach of any representation, warranty, covenant or other
agreement contained in the Merger Agreement, Bay will be obligated
to pay Old Line a termination fee equal to $5,076,000
(the “Termination Fee”). If Bay terminates the Merger
Agreement pursuant to any of clauses (1), (2), (3) or (6)
above, assuming in the case of (1) and (2) that such failure is due
to the knowing, willful and intentional actions or inactions of Old
Line or Old Line Bank, and in the case of (1), (2) and (6) that Bay
is not then in material breach of any representation, warranty,
covenant or other agreement contained in the Merger Agreement, then
Old Line will be obligated to pay Bay the Termination
Fee.
The
foregoing description of the Merger Agreement is only a summary of
its material terms, does not purport to be complete and is
qualified in its entirety by reference to the full text of the
Merger Agreement, which will be filed as an exhibit to an amendment
to this Current Report on Form 8-K. The representations,
warranties and covenants of each party set forth in the Merger
Agreement have been made only for purposes of, and were and are
solely for the benefit of the parties to, the Merger Agreement, may
be subject to limitations agreed upon by the contracting parties,
including being qualified by confidential disclosures made for the
purposes of allocating contractual risk between the parties to the
Merger Agreement instead of establishing these matters as facts,
and may be subject to standards of materiality applicable to the
contracting parties that differ from those applicable to investors.
In addition, such representations and warranties (1) will not
survive consummation of the Merger, unless otherwise specified
therein, and cannot be the basis for any claims under the Merger
Agreement by the other party after termination of the Merger
Agreement except as a result of fraud or a knowing breach as of the
date of the Merger Agreement, and (2) were made only as of the
date of the Merger Agreement or such other date as is specified in
the Merger Agreement. Moreover, information concerning the subject
matter of the representations and warranties may change after the
date of the Merger Agreement, which subsequent information may or
may not be fully reflected in the parties’ public
disclosures. Accordingly, the Merger Agreement to be filed with an
amendment to this filing will be included only to provide investors
with information regarding the terms of the Merger Agreement, and
not to provide investors with any other factual information
regarding Old Line or Bay, their respective affiliates or their
respective businesses. The Merger Agreement should not be read
alone, but should instead be read in conjunction with the other
information regarding Old Line or Bay, their respective affiliates
or their respective businesses that will be contained in, or
incorporated by reference into, the Registration Statement on Form
S-4 that will include a joint proxy statement of Bay and Old Line
and a prospectus of Old Line, as well as in the Forms 10-K, Forms
10-Q and other filings that Old Line and Bay make with the
SEC.
Concurrently with
the execution of the Merger Agreement, each of Bay’s
directors and H Bancorp LLC, Bay’s largest stockholder,
entered into support agreements with Old Line pursuant to which
they have agreed, subject to the terms set forth therein, to vote
their shares of Bay common stock that they are entitled to vote for
the Merger and related matters and to become subject to certain
transfer restrictions with respect to their holdings of Bay common
stock. The foregoing summary of the support agreements does not
purport to be complete and is qualified in its entirety by the text
of such agreements, the form of which will be filed as an exhibit
to an amendment to this Current Report on
Form 8-K.
Important Additional Information.
This communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. Old Line will file with the SEC a registration
statement on Form S-4 containing a joint proxy statement/prospectus
and other documents regarding the proposed transaction. These
materials will set forth complete details of the Merger.
Stockholders and investors of Old Line and Bay are urged to read
the registration statement and the joint proxy statement/prospectus
when they become available and any other relevant documents filed
with the SEC, as well as any amendments or supplements to those
documents, because they will contain important information about
Old Line, Bay and the proposed transaction.
Investors and
security holders of Old Line Bancshares and Bay Bancorp will be
able to obtain the documents (when available) free of charge at the
SEC’s website, www.sec.gov. Copies of the documents filed
with the SEC by Old Line will be available free of charge on Old
Line’s website at www.oldlinebank.com under the tab
“Investor Relations” and then under the heading
“SEC Filings.” Security holders of Old Line may also
obtain such documents free of charge by requesting them in writing
to Old Line Bancshares, Inc., 1525 Pointer Ridge Place, Bowie,
Maryland 20716, Attention: Investor Relations. Security holders of
Bay may access the final joint proxy statement/prospectus and any
documents filed by Bay with the SEC free of charge from the
SEC’s website noted above or at Bay’s website at
www.baybankmd.com under the tab “About Us” and then the
tab “Investor Relations” and then under the heading
“SEC Filings,” or by requesting them in writing to Bay
Bancorp, Inc., 7151 Columbia Gateway Drive, Suite A, Columbia,
Maryland 21046, Attention: Investor Relations. Investors and
security holders may also read and copy any reports, statements and
other information filed by Old Line with the SEC at the SEC’s
Public Reference Room at 100 F Street, NE, Washington DC.
Information about the operation of the SEC Public Reference Room
may be obtained by calling the SEC at 1-800-SEC-0330. The
information on these websites are not, and shall not be deemed to
be, a part of this report or incorporated into other filings that
Old Line or Bay Bancorp make with the SEC.
Old
Line, Bay and certain of their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from the stockholders of Old Line and Bay in connection
with the Merger. Information regarding the interests of these
participants and other persons who may be deemed participants in
the Merger may be obtained by reading the joint proxy
statement/prospectus regarding the Merger when it becomes
available. Additional information about the directors and executive
officers of Old Line and their ownership of Old Line common stock
is set forth in the definitive proxy statement for Old Line’s
2017 annual meeting of stockholders, as previously filed with the
SEC on May 8, 2017 and available as noted above. Information about
the directors and executive officers of Bay and their ownership of
Bay common stock is set forth in the definitive proxy statement for
Bay’s annual meeting of stockholders, as previously filed
with the SEC on April 12, 2017.
Section 7 - Regulation FD
Item 7.01
Regulation
FD Disclosure.
The
joint press release announcing Old Line’s and Bay’s
entry into the Merger Agreement, an investor
presentation prepared in connection with the execution of the
Merger Agreement, and the Form of Support Agreement
are furnished herewith as Exhibits 99.1, 99.2 and
99.2, respectively.
Section 9 - Financial Statements and Exhibits.
Item 9.01
Financial
Statements and Exhibits.
(d)
Exhibits:
Agreement
and Plan of Merger, dated as of September 27, 2017, by and between
Old Line Bancshares, Inc. and Bay Bancorp, Inc. (the
schedules and exhibits have been omitted pursuant to Item 601(b)(2)
of Regulation S-K. Old Line undertakes to furnish supplemental
copies of any of the omitted schedules or exhibits upon request by
the Securities and Exchange Commission.)
Press release,
dated September 27, 2017, of Old Line Bancshares, Inc. and Bay
Bancorp, Inc. announcing execution of the Merger
Agreement
Investor
presentation ñ Overview of the Merger Agreement and the Merger
Transaction
Form
of Support Agreement
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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OLD LINE
BANCSHARES, INC.
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Date: September
28, 2017
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By:
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/s/
Elise
M. Hubbard
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Elise M. Hubbard,
Senior Vice President
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and Chief Financial
Officer
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